New Tech "Wagon"

05/27/2005 12:00 am EST


Garrett Van Wagoner

President, Van Wagoner Capital Management

"Don’t worry about the stocks that were great in the old tech bubble," cautions Garrett Van Wagoner. "Those are not going to be great companies the next time around." Here, he offers a look at a pair of undiscovered tech plays for the next tech bandwagon.

"If you are going to invest in technology, invest in the things that are ‘happening,’ that are new, that are vibrant, that are growing. Stop looking at the old bubble names of 1999 and 2000. I can’t tell you how many times in my seminars, I get asked about the old tech players. They’re not bad companies. But they are not the next generation. I think for your portfolios, if you do want to find big gains over a multi-year period, you have to be looking at the new things that are going on. Here are two stocks that represent very attractive long-term values. When you look at their charts, they are very ugly. These are not momentum-oriented stock. They are business franchises that are getting better, yet are unrecognized. In my opinion, if you do your homework and accumulate at these levels, you’ll be very happy on a 12- to 24-month time horizon.

"Stocker Yale (STKR NASDAQ) made the exact wrong move by getting into the fiber optic business right at the top. However, they have hung in there and are now the only domestic firm making specialty fiber optic cable. I’d note that they are not in competition with companies like Corning, as Stocker makes specialty fiber, which they custom develop and design for specific applications. Their biggest application is in defense, which is an expanding market. Their revenues are growing. Orders are up 5% to 10% every quarter and I think we’re going to see some great news out of this company over the next six months as the defense business continues to update their systems, which require a lot of specialty optical fiber. So they are in a great competitive position and I think we’ll have a lot to talk about regarding this company over the next couple of years.

"Medwave (MDWV NASDAQ) is a real flyer. The company has a new technology for measuring blood pressure. The 'cuff' that is currently used was invented during the Civil War and hasn’t really been advanced since. Well, MedWave has developed a clasp that goes around your wrist and in seconds can measure your blood pressure as accurately as an invasive procedure. The product is approved and they are struggling to get it to market right now. They are bringing out their sales force. They are rolling out distribution. Yes, they are running into the problem of having to go into hospitals and telling them to stop using a technology that the doctors and nurses have used for 100 years. The Mayo Clinic uses it exclusively and the firm is quickly penetrating the pediatric world, which is a very sensitive group for blood pressure monitoring. They also have several devices in the Vice President's offices and, until recently, its devices were used at the Vatican. So people in the know are using this technology and this is going to be an interesting company to watch."

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